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Hospital Groups Push Back on Proposed Medicaid Rule

By Mary Agnes Carey, CQ HealthBeat Associate Editor
March 23, 2007 -- Hospital groups, lawmakers, and governors are continuing to fight the Bush administration on proposed regulatory changes to Medicaid they say would cut nearly $4 billion from the nation's health care safety net over the next five years.

"The administration's proposed cuts will force many public hospitals to slash vital services and some may even be faced with closure," Larry S. Gage, president of the National Association of Public Hospitals and Health Systems, said in a statement.

Sen. Jeff Bingaman, D-N.M., said during a news conference Wednesday that the proposal would cut more than $100 million from his state's hospitals and would devastate hospitals located in rural areas.

Bingaman is one of approximately 60 senators who have signed a letter sent to the Centers for Medicare and Medicaid Services (CMS) opposing the proposed regulations, saying the changes would "usurp state flexibility and fundamentally alter the nature of state funding for the Medicaid program."

The plan addresses funding arrangements targeted last year by the administration in its budget proposal for fiscal 2007. The administration says the mechanisms exaggerate the amount of money states actually spend for legitimate purposes in the Medicaid program, boosting federal payouts beyond the legal limit on the percentage the federal government pays for a state's Medicaid program.

Herb Kuhn, acting deputy administrator for the Centers for Medicare and Medicaid Services, said Thursday that only the comment period for the proposed rule was closed and he would not judge the outcome until the final regulation is released.

At Wednesday's news conference, National Governors Association Executive Director Raymond C. Scheppach said the administration's plan would be "a major obstruction in states moving forward in broad reform" to cover the uninsured. "It's not the time to pull $5 billion out of the system. What we need is additional funding to move the system forward."

Rick Pollack, executive vice president of the American Hospital Association, said the administration's plan would affect not only Medicaid patients but also anyone who needs trauma care, neonatal care, and burn treatments.

Cage said he hoped the senators' letter—as well as the groups' opposition—would spur the administration to "come to its collective senses and withdraw this proposed regulation."

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